Measures of bond risk surged amid concern investors could face more losses after Third Avenue Management froze redemptions at a high-yield fund.

The Markit iTraxx Europe Crossover Index, which tracks insurance against losses on junk bonds, rose for a fifth day, climbing 14 basis points to 348 basis points, according to data compiled by Bloomberg.

The Markit iTraxx Europe Index linked to investment-grade companies rose three basis points to 83, the highest since October 7.

Third Avenue Management said last week it was liquidating a $788m (€713m) credit mutual fund, fuelling the biggest one-day selloff in the US junk-bond markets since August 2011 on Friday.

As the declines intensified and more investors demanded their money, hedge fund Stone Lion Capital Partners also suspended redemptions.

"We're in one of those moments where all of a sudden there's a complete liquidity gap," said Geraud Charpin, a portfolio manager at BlueBay Asset Management.

"If everybody wants to rush for the door it's not going to happen and more funds may have to temporarily gate. You want to appeal to calm."

Investors including Jeffrey Gundlach, Carl Icahn and Bill Gross, have warned there could be worse to come for high-yield debt.

Icahn said on Twitter that "the meltdown in High Yield is just beginning". Scott Minerd, global chief investment officer at Guggenheim Partners, predicts 10pc to 15pc of junk bond funds may face high withdrawals by worried investors.

The average yield on junk bonds globally jumped to a more than three-year high of 8.43pc this month. (Bloomberg)